As a business owner, you’ll inevitably experience some financial challenges as you grow your company. This might mean that one month you’re flush with cash and the next you desperately need to make payroll or have enough funds in the bank to cover the next round of expenses such as paying suppliers’ invoices or rent. At times like these, you may feel like you’re drowning and aren’t sure what to do next. How can you keep tabs on your business finances and make sure they don’t get out of hand? Here are some tips for managing your cash flow so that it’s always on track:
One of the first steps toward being able to manage your business finances is to start tracking your expenses. This will give you a clear idea of how much money you’re spending on specific items, so you can easily see if you’re on track or if you need to cut back. You can do this with a spreadsheet or online accounting software like QuickBooks. You also want to monitor your cash flow regularly so you can catch any problems before they spiral out of control. This means setting up automated alerts to let you know if you’re running low on any specific types of funds.
Before you begin investing in new projects or hiring additional staff members, make sure that you have enough money saved up in the bank to cover the upcoming expenses. You can use a budgeting spreadsheet to help you track your incoming and outgoing funds so that you always have enough saved up in reserve to cover your expenses. This will help you avoid getting into a situation where you’re desperately trying to fund an upcoming project, but can’t because there’s not enough cash in the bank. You can also hire a bookkeeper or accountant if you don’t have the time to keep track of all of your finances.
Businesses are not infallible, and sometimes suppliers will run into issues that slow down production or create a backlog of orders. If your supplier experiences a production issue and can’t meet your anticipated delivery date, you need to have a backup plan in place. You can either start looking for a new supplier or find a way to work around the problem. For example, if you need to deliver a large order of parts to a manufacturer, you can find another part that is similar so you can meet the deadline. This will help you avoid getting stuck with an expensive and difficult-to-deal-with supplier.
If you’re in the process of applying for loans or raising capital for your business, it’s important to factor in the costs of taxes when creating a budget. You’ll also want to set aside a certain percentage of your revenue for taxes, so you don’t run into any problems when it comes time to file your taxes. If you don’t know how much you’ll be paying in taxes, you can use an online business tax estimator to get a ballpark figure. Once you know what you’ll owe in taxes, you can create a budget based on that figure.
When you're starting or running a business, cash flow is key. You need to make sure that you have enough money coming in from customers and clients to cover your expenses and keep your business afloat. You need to keep tabs on your expenses and make sure that you have enough cash in the bank to cover upcoming expenses. You also need to have a backup plan in place if your supplier runs into issues and can't meet your delivery date. When you manage your cash flow effectively, you can avoid getting into financial trouble and keep your business on track.